Japanese bank stocks slide most in three years on BOJ policy, SVB concern

JAPANESE banks shares slid by the most in three years, rattled by the Bank of Japan’s (BOJ) decision to maintain its easy-money policy and concerns over the health of a US tech lender.

The Topix Banks Index tumbled 5.4 per cent, the most since March 2020. Mitsubishi UFJ Financial Group fell 6.1 per cent, also the most in three years. Peers Sumitomo Mitsui Financial Group and Mizuho Financial Group dropped about 5 per cent each. 

Asian financials had opened the day lower following a rout in US bank shares after SVB Financial Group took steps to shore up its capital position, stoking concern that soaring interest rates are eroding balance sheets across the financial industry.

Japanese bank stocks accelerated declines after the BOJ’s decision not to take action spooked investors who had positioned for a potential surprise from Haruhiko Kuroda’s last meeting as governor. The yen weakened and Japanese bond yields fell.

Tomoaki Kawasaki, a senior analyst at Iwaicosmo Securities, said bank investors are likely selling to take profit after the recent run-up in bank shares, when it becomes clear that there will be no change in policy. 

Financial shares had climbed after the BOJ’s surprise move in December to tweak its yield curve control, which some saw as indicating the possible start of monetary tightening. Continued easing for now means banks have to live with the ultra-low interest rates that have hurt their profits for years. BLOOMBERG